22-02-2013, 04:23 PM
FUNDAMENTAL ANALYSIS OF THERMAX
FUNDAMENTAL ANALYSIS.pdf (Size: 1.18 MB / Downloads: 50)
Executive Summary
This project report is about equity research that starts with the introduction of stocks, stock market, stock valuation, and factor affecting stock valuation, valuation methods, about value and valuation techniques which are explained in detail in
Chapter 1 Macro Economic Factors affecting Indian Economy are explained in
Chapter 2 Industry analysis which contains introduction to industry, five force analysis, risk in industry are covered in chapter 3,Chapter 4, are parts of company analysis which includes Ratio analysis, WACC method calculation of Thermax .
Report ends with conclusion, recommendation, limitation, learning and bibliography.
INTRODUCTION
About stocks
What Are Stocks?
In finance, a stock represents a share in the ownership of an incorporated company. In industrial societies wealth used in production is owned in the aggregate mostly by corporations rather than by individuals because of the huge investments required. This trend began in 17th-century England when merchants formed JOINT-STOCK
COMPANIES, pooling capital to be used jointly in trading and manufacturing. Participants then received dividends, shares of the common PROFIT proportionate to their original investments.
The Definition of a Stock:
Plain and simple, stock is a share in the ownership of a company. Stock represents a claim on the company's assets and earnings. As you acquire more stock, the ownership stake in the company becomes greater. Whether you say shares, equity, or stock, it all means the same thing.
The wealth of individuals includes claims against, or investments in, corporations. These are called securities, the two most common being bonds and stocks. Corporate bonds are evidences of corporate debt to the bondholder. Stocks are evidences of ownership, or equity. Investors buy stock in the hope that it will yield income from dividends and appreciate, or grow, in value.
Common stock:
When people talk about stocks they are usually referring to this type. In fact, the majority of stock is issued is in this form. Common shares represent ownership in a company and a claim (dividends) on a portion of profits. Investors get one vote per share to elect the board members, who oversee the major decisions made by management.
Over the long term, common stock, by means of capital growth, yields higher returns than almost every other investment. This higher return comes at a cost since common stocks entail the most risk. If a company goes bankrupt and liquidates, the common shareholders will not receive money until the creditors, bondholders and preferred shareholders are paid.
Preferred Stock:
Preferred stock represents some degree of ownership in a company but usually doesn't come with the same voting rights. (This may vary depending on the company.) With preferred shares, investors are usually guaranteed a fixed dividend forever. This is different than common stock, which has variable dividends that are never guaranteed. Another advantage is that in the event of liquidation, preferred shareholders are paid off before the common shareholder (but still after debt holders). Preferred stock may also be callable, meaning that the company has the option to purchase the shares from shareholders at anytime for any reason (usually for a premium).
Why invest in the stock market?
It is risky to invest in stock market as returns are not sure. Also it is difficult to say with surety whether they will make a profit or loss but the average investor buys stock hoping that the stock's price will rise, so the shares can be sold at a profit. They take the risk of the price falling because they hope to make more money in the market, than they can with safe investments such as bank CD's or government bonds.
What Stock Market Returns to Expect?
Stock market returns rely solely on what types of investments you choose. The riskier the investments, the more you can gain or lose in any year. However, if you are investing for a long time horizon, then more risk will almost surely mean higher returns. Also note that this assumes you invest in a diversified portfolio (i.e. not just one stock). There is no hard and fast rule as to exactly what to expect when you invest. And because the amount of risk you take in the investments can also not be measured accurately, it is even harder to know what type of returns to expect.